Not everyone is looking for a showpiece of a property. The majority of us simply hope to find a home that suits our family’s needs, gives us some room to grow and is located in an area we’re excited to put down roots in.
“We are your neighbourhood Realtor. We do not specialize in luxury or high end properties, although we are quite competent in those areas. We are the Brokerage that families, downsizers and those starting out in the real estate market would like to have working for them and would refer to their friends and families,” says REALTOR® Brenda McKinley.
Clients tend to ask the following typical questions. Village Media sat down with McKinley to discuss the nuances of deposits and condo fees, what clients should be looking for in a house and how to know how much they can afford.
Village Media: When should clients be prepared to pay the deposit on a home?
Brenda McKinley: In a real estate transaction, the deposit is sometimes called ‘earnest money’ and is often about 5% of the purchase price, although it is negotiable. This is an amount that is payable to secure the deal. Unless other arrangements are made, the deposit needs to be paid to the listing brokerage within 24 hours of your offer being accepted. This deposit is held in trust until the transaction closes, at which time the deposit is applied to the purchase price of the property.
For example, if you purchase a home for $1,000,000 and you pay a $50,000 deposit, you will only have to come up with $950,000 on closing which includes your mortgage. In the event the transaction does not close, the deposit may be refundable in certain circumstances—maybe the buyer had a financing condition and was unable to obtain funds, or there was an inspection condition and the home failed the inspection.
VM: How do you explain the difference between a deposit and a down payment?
BM: The deposit, as I’ve mentioned, is earnest money and is typically payable within 24 hours of an offer being accepted. The deposit is paid to the listing brokerage and is maintained in their trust account until the transaction closes or is otherwise terminated. Failure to submit your deposit within time limits can void your purchase.
A down payment is the amount of money equal to the purchase price minus the deposit, minus the mortgage amount. So, if a home is purchased for $1,000,000 and the buyer pays a $50,000 deposit and arranges a $750,000 mortgage, the down payment would be the remaining amount, or $200,000. In this instance, you would need to personally have access to a total $250,000 (for the deposit plus the downpayment) on or before the date set for closing.
VM: What should clients be looking for in a house?
BM: That depends. Are you looking for a turnkey home that you can move into without doing anything or are you handy and willing to do some upgrades and repairs in exchange for getting a better price for the home? Are you looking for a home for yourself or you and one other person or do you have a large family that needs lots of bedrooms and living space? Do you want lots of outdoor space or is a condo apartment with a balcony sufficient? Are you willing to do yard work?
There are many variables here and you need to think long and hard about things like location—will this home cause you to have a long commute? Or do you want to live in a quieter or busier area? Your Real Estate Salesperson will sit down with you and help with a needs analysis. It’s not always about price.
VM: What is the difference between a condo townhouse and a freehold townhouse?
BM: With a freehold townhome you own the land and the building. You will be responsible for all upkeep and repairs. Sometimes there are covenants that travel with the title which outline certain restrictions. An example of those restrictions might be that exterior colours must be chosen from a specific colour palette.
With a condo townhome there is a Board of Directors made up of homeowners and a Property Management Company that oversees the property. There will be monthly fees that can cover many things. Usually the higher the fee, the more that is included. One example is a townhome that has fees around $500 per month that will cover landscaping, building insurance, snow removal, window and shingle replacement, exterior maintenance and general property management. Some condo corporations are responsible for the road maintenance and the actual building, and landscaping is the responsibility of the homeowner.
When deciding to purchase a property that has a condominium component, it makes sense to include a condition on having a review of the condo documents by your lawyer. That way you will know for sure what is included and what is not included in your fees and allow you to review the rules to be sure there is nothing in them that you can’t live with. For instance, are pets allowed? Some condo boards do not allow commercial vehicles to be parked in driveways. Do you drive a commercial van or truck? These are all things that Realty World Legacy Agents will review with you.
VM: What do condo fees cover? Does it vary?
BM: Each condominium corporation is different. I know of one property where the condo corporation only owns the private beach adjacent to the homes and the homeowners only pay about $300 a year to cover cleanup of the beach and taxes. Another is an older high rise. Here the condo fees are quite high but include building insurance, heating, air conditioning, hydro, water, exterior maintenance, loads of common areas (gym, party room, library, inground pool, full-time superintendent, windows, balconies, underground parking, the list goes on) and even cable. Newer condo apartment buildings often make the heating, air conditioning, water and hydro the responsibility of the homeowner, which keeps fees lower.
Townhouse condos do not typically cover utilities but many cover the cost of window, door and shingle replacement, or will repair basement leaks. Then there is the hybrid model where the actual townhouse unit is freehold but the condo corporation covers the cost of maintaining roadways and visitor parking. With these units the fees are typically low—under $100 per month. Your Realty World Legacy Real Estate Agent will be happy to go over these details with you to help you decide what works best for you.
VM: How do clients know how much they can afford when they’re deciding to buy a home?
BM: This is where it makes sense to speak to a mortgage broker. They will have a look at your income and your current debt, along with the money you have for a down payment. By reviewing all of this information, along with your credit history, they will be able to determine how much you can afford and whether their lender will see you as a good risk.
Thus the approval process has two parts. First the lender determines your ability to pay and then they look at the property that you plan to buy and decide whether it is worth what you have paid. Even if you do not get an approval right away, a good mortgage broker will be able to start you in the right direction so that you are eligible for a mortgage in the near future.
Sometimes you may be approved for a much more expensive home than you are comfortable with. That’s okay. You just have to decide how much you are prepared to pay monthly for housing and stick to it. Many of us have other priorities for our money, like travel or investments. Our agents will be happy to refer you to some great mortgage brokers to advise you.
VM: Is newer construction better than resale? Why are clients sometimes hesitant about older homes—and should they be?
BM: Many buyers have been advised that they should buy a home that is newer, often less than 12 years old. They are afraid that if they purchase something older there will be major repairs coming up, like roofs, furnaces, wiring, etc. The truth is that many new homes still require landscaping, fencing, their driveways may not be paved and their basement may not be finished, so they are not without expense. It is possible that an older home has been completely renovated, with newer shingles, windows, doors, finished basement, landscaping done, etc.
Don’t let the age of the home deter you from what could possibly be a great purchase. Your Realty World Legacy agent and a home inspector will be able to advise you on the status of the major components of the home so that you have no surprises.
Realty World Legacy specializes in homes and condos in Burlington, Hamilton and the GTA, offering local knowledge and global reach. The brokerage has raised money and food donations for the Burlington Food Bank and for Food4Kids. They are currently fundraising for the Dr. Bob Kemp Hospice.
Broker of Record Brenda McKinley can be reached at 905-320-8306 and our agents can be reached at 289-714-3878. You can also follow Realty World Legacy on Facebook.
1505 Guelph Line, Unit 13
